fredag 19 oktober 2012

The Honduran Supreme Court has ruled unconstitutional a project to build privately-run cities, with their own police and tax system. The "model cities" project was backed by President Porfirio Lobo, who said it would attract foreign investment and create jobs By 13 votes to one, Supreme Court judges decided that the proposal violated the principle of sovereignty.
- Honduras court bans private cities project

An American company was expected to invest US$15m in the initial phase of construction of the first city. ... President Lobo said thousands of jobs would be created in the impoverished Central American country. ... The inspiration for his "model cities" were Singapore, Macao and Hong Kong"

tisdag 9 oktober 2012

Like most
price discriminators, municipal transit was vulnerable to competitors
who chose to serve the overcharged segment of their customers. Around
1914-1915, the mass production of the automobile led to the rise of
owner-operated bus or taxi services costing five cents and therefore
called "jitneys," the current slang for nickels:

The
jitneys were owner-operated vehicles which essentially provided a
competitive market in urban transportation with the usual
characteristics of rapid entry and exit, quick adaptation to changes in
demand, and, in particular, excellent adaptation to peak load demands.
Some 60 percent of the jitneyman were part-time operators, many of whom
simply carried passengers for a nickel on trips between home and work.
Consequently, cities were criss-crossed with an infinity of home-to-work
routes every rush hour.
The jitneys were put down in every
American city to protect the street railways and, in particular, to
perpetuate the cross-subsidization of the street railways' city-wide
fare structures. As a result, the public moved to automobiles as private
rather than common carriers....

In short, the cross
subsidy scheme not only distorted the location of homes and businesses;
it artificially increased the "need" for private automobiles by forcibly
preventing or restricting the sharing of cars through the market. (s.
184-185)

Some idea of the complications insulating regulatory agencies from feedback from the affected public may be suggested
by the fact that specialists studying federal regulatory agencies
"cannot even agree on the number" of such agencies, although "it is
thought to be over 100." A senator critical of regulatory commissions
claims that simple "common sense" is "rare" in many of them, and then
characterizes them as "undemocratic, insulated, and mysterious to all
but a few bureaucrats and lawyers." Such criticism misses the point that
the agencies' own interests could hardly be better served than by being
so incomprehensible to outsiders that even a United States senator with
a staff at his disposal cannot find out precisely how many such
agencies there are, much less exercise effective legislative oversight
over their activities. The costs of regulation to the public - that is,
its uneconomic effects as well as its administrative costs - have been
estimated by the U.S. General Accounting Office at about $60 billion per
year - about $1000 for every family in the United States. The
regulatory decisions which impose such costs may seem to lack "common
sense" as public policy, but such decisions often make perfect sense
from the regulatory commission's own viewpoint - especially in favoring
such incumbent special interests as have enough at stake to pay the high
knowledge costs of continuously monitoring a given agency's activities.
(s. 191)

This is the idealized economic theory [for why natural monopolies should be regulated].
The reality is something else. Once a rationale for regulation has been
created, the actual behavior of regulatory agencies does not follow
that rationale or its hoped-for-results, but adjust to the institutional
incentives and constraints facing the agencies. For example, the scope
of the regulation extends far beyond "natural monopolies," even where it
was initially applied only to such firms. The broadcast-interference
rationale for the creation of the Federal Communications Commission in
no way explains why it extended its control to cable television. The
"natural monopoly" that railroads possessed in some nineteenth century
markets led to the creation of the Interstate Commerce Commission, but
when trucks and buses began to compete in the twentieth century, the
regulation was not discarded but extended to them. Airplanes have never
been a "natural monopoly," but the Civil Aeronautics Board has followed
policies completely parallel with the policies of other regulatory
agencies. It has protected incumbents from newcomers, just as the FCC
has protected broadcast networks from cable TV, as the ICC has tried to
protect railroads from trucking, or municipal regulatory commissions
have protected existing transit lines from jitneys or other unrestricted
automobile-sharing operations. As a leading authority has summarized
CAB policy: "Despite a 4,000 percent increase in demand between 1938 and
1956, not a single new passenger trunk line carrier was allowed to
enter the industry." (s. 195-196)

Many of the most extreme examples of employing unnecessary labor - "featherbedding" - are found in regulated industries. Duplicate crews for handlingg trains on the road and handling the same trains when they enter the railroad yard, retention of coal-shovellers or "firemen" after locomotives stopped using coal, and elaborate "full crew" laws and practices are among the many financial drains on the American railroad industry, which is financially unable to keep its track repaired or maintained in sufficiently safe conditions to prevent numerous derailments per year and the spread of noxious or lethal chemicals shich often accompany such accidents. (s. 199)

With women the key variable is marriage. Even before "affirmative action" quoatas, women in their thirties who worked continuously since high school earned slightly more than men in their thirties who worked continuously since high school. In the academic world, where many discrimination charges have been filed under affirmative action, female academics earned slightly more than male academics when neither were married - again even efore "affirmative action" - and unmarried female Ph.D.'s who receieved their degrees in the 1930s and 1940s became full professors in the 1950s and 1to a slightly greater extent than did unmarried male Ph.D.'s of the same vintage. In short, the male-female differences in incomes and occupations are largely differences between married women and all other persons. Sometimes this is obscured in data for "single" women, many of whom are widowed, divorced, or separated - that is, have had domestic and maternal handicaps in pursuing their careers. (s. 260)

The rising murder rate in the United States is largely a phenomenon dating from the mid-1960s, and continuing to escalate in the 1970s - a rise generally coinciding with the sharp dropoff in executions. This rise in murder rates reversed a long-term decline in the murder rate in the United States. The absolute number of murders in American urban centers of 25,000 or more remained relatively constant from 1937 through 1957, even though the population in such centers was growing rapidly over that span. Urbanization, as such, apparently had not entailed rising murder rates. (s. 275)

This consumer good aspect of totalitarian ideology is an essential part of the phenomenon. The hypnotic fascination and exhiliration with which Hitler's followers listened to his speeches was an integral part of Nazism. Among Communists, the vision of the ideology itself - the "wretched of the earth" creating "a new world" - substitutes for oratorical genius, and has in fact proven far more effective with intellectuals. The "intellectual delight" and "intellectual bliss" on reading the Marxian vision, the sense of revelation when "the whole universe falls into a pattern like the stray pieces of a jigsaw puzzle assembled by magic at one stroke," the thrill when the "revolutionary words leaped from the printed page and struck me with tremendous force" - these are part of the psychic rewards for the total commitment that characterizes totalitarian movements.
... It is only in the light of such ideological visions that it is possible to understand the "confessions" to nonexistent crimes which have been produced not only in Soviet courts but even in Communist movements in Western democracies - movements possessing no tangible power to punish their members. The ideological context dwarfs the particular characteristics of the particular individual, as in this description of an internal party "trial" among American Communists in the 1930s:

... there had to be established in the minds of all present a vivid picture of mankind under oppression.... At last, the world, the national, and the local pictures had been fused into one overwhelming drama of moral struggle in which everybody in the hall was participating. This presentation had lasted for more than three hours, but it had enthroned a new sense of reality in the hearts of those present, a sense of man on Earth...Toward evening the direct charges against Ross were made. ...
The moment came for Ross to defend himself. I had been told that he had arranged for friends to testify in his behalf, but he called upon no one. He stood, trembling; he tried to talk and his words would not come. The hall was as still as death. Guilt war written inevery pore of his black skin. His hands shook, he held onto the edge of the table to keep on his feet. His personality, his sense of himself, had been obliterated. Yet he could not have been so humbled unless he had shared and accepted the vision that had crushed him, the common vision that bound us all together.
"Comrades," he said in a low, charged voice, "I'm guilty of all the charges, all of them."
His voice broke in a sob. No one prodded him. No one tortured him. No one threatened him. He was free to go out of the hall never see another Communist. But he did not want to. He could not. The vision of a communal world had sunk into his soul and it would never leave him until life left him. (s. 309-310)

While freedom antedates constitutional democracy, both are rooted in a division of power. ... Freedom as a result of division prevailed among the Arabs efore Mohammed united them, and religious freedom existed among the diverse peoples of the Roman Empire before Christianity united them by conversion or through force. Much of the freedom of colonial America and the early United States was a fortuitous freedom, born of the sheer diversity of local despotisms, too numerous and widespread to unite or overcome on another. A leading American historian has observed: "In none of the colonies was there anything that would today be recognized as 'freedom of the press.'" Religious freedom was equally scarce. In 1637 the Massachusetts Bay Colony "passed an ordinance prohibiting anyone from settling within the colony without first having his orthodoxy approved by the magistrates." A Puritan leader declared that other religionists "shall have free Liberty to keep away from us." The banishment of Roger Williams, and the public whippings and brutal imprisonment of the Quakers who came to Massachusetts unique, or Quakerism the only proscribed religion. In late colonial America, "the only place where the public exercise of Catholic rites was permitted was Pennsylvania, and this was over the protest of the last governor." It was from this "decentralized authoritarianism" that a "great diversity of opinion" came, not from toleration in principle but from "the existence of many communities within the society each with its own rigid canons of orthodoxy." (s. 315-316)

It
was the great conservative thinker Edmund Burke who refused to
categorically defend the status quo, saying, "A state without the means
of some change is without the means of its conservation," and "he that
supports every administration subverts all government." (s. 154-155)

Although it may be empirically true that different ideologies generally regard central planning in different ways, it is not ultimately in principle an ideological question. Marx and Engels were unsparing in their criticisms of their fellow socialists and fellow communists who wanted to replace price coordination with central planning. Proudhon's theory that the government should fix prices according to the labor time required to produce each commodity was blasted by Marx in the first chapter of The Poverty of Philosophy:

Let M. Proudhon take it upon himself to formulate and lay down such a law, and we shall relieve him of the necessity of giving proofs. If, on the other hand, he insists on justifying his theory, not as a legislator, but as an economist, he will have to prove that the time needed to create a commodity indicates exactly the degree of its utility and marks its proportional relation to the demand, and in consequence, to the total amount of wealth. (s. 218-219)

måndag 8 oktober 2012

The most basic of all decisions is who shall decide. This is easily lost sight of in discussions that proceed directly to the merits of particular issues, as if they could be judged from a unitary, or God's eye, viewpoint. A more human perspective must recognize the respective advantages and disadvantages of different decisions-making processes, including their widely varying costs of knowledge, which is a central consideration often overlooked in analyses which proceed as if knowledge were either complete, costless, or of a "given" quantity. Decision-making processes differ not only in the quantity, quality, and cost of knowledge brought to bear initially, but also and perhaps still more so, in the feedback of knowledge and its effectiveness in modifying the initial decision. This feedback is not only additional knowledge, but knowledge of a different kind. It is direct knowledge of particulars of time and place, as distinguished from the secondhand generalities knows as "expertise". The high personal cost of acquiring expertise, and the opportunities it presents for displaying individual talent or genius, make it a more dramatic form of knowledge, but not necessarily a more important form of knowledge from a decision-making point of view. (s. 40-41)

To those who feel that their values are the values, the less controlled systems necessarily present a spectacle of "chaos", simply because such systems respond to a diversity of values. The more successfully such systems respond to diversity, the more "chaos" there will be, by definition, according to the standards of any specific set of values - other than diversity of freedom as values. (s. 43)

Efficiency in turning inputs into outputs can be measured only after specifying the subjective values involved. (s. 52)

Sometimes the choice between cultural and individual decision making is a choice between "feelings" and articulated rationality. Given the imperfections of language and the limitations of specific evidence, it is by no means a foregone conclusion that the mere formally logical articulation is in fact more rational, much less empirically correct. When the choice between the two processes is not within one individual but between one individual and another (or between one group and another), it is even less likely that the more articulate position is the more valid position. (s. 102)

In this way, there is a created the social equivalent of the economic agent who is a residual claimant and therefore can function with social effectiveness as an "unmonitored monitor." ... The concept of an "unmonitored monitor" with a broad mandate may seem dubious as a way of getting a job done. Articulated specifics (job description, organizational rules, etc.) enforced by tiers of monitors are much more rationalistic. However, the ultimate question is not plausibility but results. Unmonitored monitors are among the most hard-working and dedicated people in the society. Mothers and businessman are classic examples. In their very different ways, these two unmonitored monitors have become notorious for the intensity and duration of their efforts, and are often admonished to "take it easy" by those closest to them, even though the latter are often the beneficiaries of their efforts. (s. 111-112)

Choice through the ballot box has often been equated with choice through the market. But inherent constraints mean that democratic governments have no wider array of options to offer than anyone else - regardless of what options many may believe to exist - and that one crucial difference between ballots and prices is that prices convey effective knowledge of inherent constraints, while ballots do not. If I desire a Rolls Royce and simultaneously a normal standard of living, the price tag on the automobile immediately informs, convinces, and virtually coerces me to the conclusion that these two things are inconsistent. But if I believe simultaneously in a large military arsenal, low taxes, a balanced budget, and massive social programs, there are no constraints on my voting that way. (s. 119-120)

Kolla även in David Friedmans analys av val i en demokrati vs. marknad i The Machinery of Freedom, i kapitlet "Buckshot for a socialist friend".

There are various authentication processes, ranging from consensual approval to scientific proof, and a virtually limitless variety of institutional processes for carrying out this authentication, or weeding.out, process. The fragmentary nature of social knowledge means that the authentication and feedback must involve numerous individuals, and that they must be connected by some system of mutual incentives and constraints. Feedback which can be safely ignored by decision makers is not socially effective knowledge. Effective feedback does not mean the mere articulation of information, but the implicit transmission of others' knowledge in the explicit form of effective incentives to the recipients. A corporation's profit and loss statement or a baby's whimpers are such transmissions. Both galvanize people into action in response to other people's feelings, even though one is articulated and the other not. It is the effectiveness of the incentive transmission, not the explicit articulation, that is crucial. (s. 150)

Min blogg ger förhoppningsvis ut effektiv kunskap på lång sikt... :-)

The term "minimum wage" law defines the process by its hoped-for results. But the law itself does not guarantee that any wage will be paid, because employment remains a voluntary transaction. All that the law does is reduce the set of options available to both transactors. Once the law is defined by its characteristics as a process rather than by its hoped-for results, it is hardly surprising that there are fewer transactions (i.e., more unemployment) with reduced options. What is perhaps more surprising is the persistence and scope of the belief that people can be made better off by reducing their options. In the case of the so-called minimum wage law, the empirical evidence has been growing that it not only increases unemployment, but that it does so among the most disadvantaged workers. (s. 173)

Much articulation goes into trying to demonstrate to third party observers that the forcible transfers lead to more beneficial results. Yet on general principle, it is not clear that articulation is the best mode for weighing alternative values or that third party observers are the best judges. When a given set of homes and businesses are destroyed to make way for a very different set of homes and businesses, as in "urban renewal," a truly greater value of the second set would have enabled their users (or financial intermediaries) to bid the land away from the original users through voluntary market competition without the use of force by the government (especially since the second set of users almost invariably has higher incomes than the first). (s. 192)

Political and legal institutions provide the rigidities - "rights" - people want in some vital areas of their life, where they reject both the transactions costs and the indignity of having to submit to, or negotiate with, those who might challenge or threaten their possession of their home, their children, or their life. Constitutional systems attempt to sharply demarcate these areas of basic rights from other areas in which the discretion and flexibility of individual choice and interpersonal negotiation may achieve whatever arrangements are deemed mutually satisfactory by the individuals concerned. In short, constitutional political and legal systems attempt to limit their own scope to areas in which they have a relative advantage as decision-making processes, leaving other areas to other decision-making processes, whose advantages may be either in the quality of the decisions or in the personal dignity implied by free choice. (s. 36)

However difficult it may be to directly know what is going on in someone else's mind - such as changing expectations - it has concrete consequences which take place long before the future events contemplated. Restrictions on the future use of property is a reduction in its present value, since one component of its present value is its future saleability. In short, a reduction in property rights is a partial confiscation of property; to take away 10 percent of the value of land is economically no different from taking away 10 percent of the land itself. (s. 39)

Morality as an input into the social process is subject to diminishing returns, and ultimately to negative returns. With no morality at all, force would be more prevalent - a loss both to those subject to it and to the efficiency of the social processes. A modicum of honesty and decency greatly reduces the incessant and desperate efforts otherwise necessary to protect life and belongings from every other human being. Beyond some point, social morality becomes irksome to individual autonomy. Finally, if each individual were to become absolutely committed to moral behavior as he saw it, no society would be possible among diverse individuals or groups. (s. 107)

The evidence surveyed in this paper demonstrates that there can be no simple general conclusion about the relationship between trade liberalization and poverty. Theory provides a strong presumption that trade liberalization will be poverty-alleviating in the long run and on average. The empirical evidence broadly supports this view, and, in particular, lends no support to the position that trade liberalization generally has an adverse impact. Equally, however, it does not assert that trade policy is always among the most important determinants of poverty reduction or that the static and micro-economic effects of liberalization will always be beneficial for the poor. Trade liberalization necessarily implies distributional changes; it may well reduce the well-being of some people (at least in the short term) and some of these may be poor.

Perhaps the question on which scholars disagree the most is whether a lightly regulated banking system can dispense with a lender of last resort. While some students of lightly regulated banking argue that a central bank is unnecessary; others maintain that the potential for a banking panic exists in any fractional reserve system, so that some institutional arrangement is needed to deal with the problem. ... The jury is still out.